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Mr Manothong Vongsay, Director General of Investment Promotion Department, Ministry of Planning and Investment and Madame Valy Vetsaphong, Vice President of LNCCI led the consultation session on the Draft Law on Investment Promotion on 29 September 2016.
During the session the latest draft of the Law on Investment Promotion was presented to members of the business community, including representatives from the foreign business chambers, AustCham and ECCIL, with attendees invited to provide their comments and feedback in relation to the draft law and its application.
One of the key changes in the draft law is the removal of minimum Registered Capital for general business activities, which at present is 1 billion Kip, or approximately USD125,000. Whilst some protected sectors will still be subject to minimum capital requirements according to industry specific regulations – for example construction, logistics, and wholesale and retail – under the current draft all other companies established to undertake general business activities will be able to commence operations without the need to import minimum cash levels and in-kind capital within 90 days of being issued their licences.
Mr Manothong Vongxay explained that the reasoning behind this amendment to the law was to remove barriers to entry for small and medium enterprises, to boost research, development and innovation projects, and to reflect the changing nature of businesses in Laos, which has seen a shift from heavy equipment/asset reliant activities to online and mobile devices services.
Other key changes include:
- The replacement of a debt-to-equity ratio applicable to concession projects which previously required concession projects to ensure their Registered Capital (equity) was at least 30% of their Total Capital (equity plus long-term debt and retained earnings), with a fixed minimum Registered Capital amount;
- A reduction of the maximum concession period from 99 years to 50 years;
- The introduction of provisions governing public-private partnerships; and
- The inclusion of a section for managing outbound investment by Lao registered companies and individuals.
The Investment Promotion Department, together with line Ministries, is aiming to submit the draft of the Law on Investment Promotion to the National Assembly in October for debate and approval.
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